Motley Fool points to basic COBRA problem

Motley Fool's columnist Brian Orelli points out the basic underlying fault of the COBRA system. Most expect that the recent stimulus will only accelerate the problem.

"Even at the discount price, who's going to sign up for the COBRA insurance after they've just lost their job: healthy patients, or those with chronic medical conditions? Health insurance, by its very nature, requires the healthy people to balance out the sick -- without them, it's just charity. The subsidized cost could even attract some very high-cost members. Someone considering taking COBRA to get an elective surgery might wait at the higher price, but decide to sign up at the lower subsidized rate."

On the flip side, those health insurance plans that do not pick up these high cost members are likely to benefit from the new legislation with lower rates of premium increase in the future. We expect individual health insurance and short term medical insurance to be increasingly more attractive for those without pre-existing medical conditions, especially when a COBRA premium subsidy is not available.

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COBRA or COBRA alterative gap insurance coverage provides temporary protection when changing jobs, going through a divorce or negotiating other life transitions. Choosing the right health insurance is crucial to guarantee health and financial security.

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